The Bank of England's rate-setting Monetary Policy Committee has kept its key repo rate unchanged at a six-year high of 5.50 pct. The decision was widely anticipated, though there had been some jitters in the market that the rate setters may deliver a surprise in the same way as they did in January. The recent BoE inflation projections and the fact that the rate-setting MPC was armed with the initial print of May CPI inflation figures had also added to market nervousness. "The MPC held the bank rate steady amid market nerves that policy might have been tightened today," said Philip Shaw, chief UK economist at Investec Securities. Only 3 of the 32 economists polled by Thomson Financial News were expecting the MPC to lift borrowing costs a quarter point for the second month running. Even though it kept rates on hold, the MPC is widely expected to raise rates again by August at the latest to avoid the upside inflation risks identified in the recent Inflation Report from materialising. In its May Inflation Report, the MPC's central projection for CPI inflation is for it to settle at the target 2 pct on the basis that the base rate rises to 5.7 pct over the next 12 months. At the same time, the MPC argued that risks to the central projection are tilted to the upside from the possibility of rising inflation expectations and firms' pricing power. The markets will be looking for further guidance when the minutes to today's meeting are published on Wednesday, June 20. George Buckley, chief UK economist at Deutsche Bank, reckons that the minutes will show that a hike was discussed and that at least two members will have voted in favour of higher borrowing costs because price pressures remain elevated and monetary aggregates continue to cause concern. The minutes to the May 9-10 meeting showed that the nine-member panel voted unanimously to raise rates a quarter point, and even discussed the possibility of lifting rates by a half point, the first such move since BoE independence a decade ago.